Post by Bill Bellows, Deputy Director, The Deming Institute.
“The efforts of the various divisions in a company, each given a job, are not additive. Their efforts are interdependent.”
W. Edwards Deming, The New Economics
In a continuation from a previous blog on what to think when things do not add up…, consider the machinist whose task was machining small holes in a metal housing. He and his upstream and downstream peers were challenged by their manager, in competition with their “teammates,” to reduce the cycle time of each of their tasks. The hole machinist cleverly won the award by saving time by not devoting any additional traditional effort for finely removing the sharp edges around the hole, a process known as deburring. While he was still meeting his requirement of deburring the holes, he saved time by providing a minimal effort, barely complying, yet technically still meeting the company’s deburring requirement. But, the time he saved was nullified by a far greater loss in time when his peers were seriously handicapped by his minimally-deburred holes in their downstream efforts. Negative synergy strikes again!
I have also witnessed best efforts with cost cutting in an office environment, when the card-stock paper in dozens of 3-ring binders used for hardware production planning was replaced with a lighter weight paper. When the thinner, less expensive, pages tore, hole reinforcement circles, 6 per page, were regularly installed on hundreds of pages of planning documents.
In her book, Thinking Systems, Donella Meadows offers a reminder of the previously quoted Sufi expression (“You think because you understand one you must understand two, because one and one makes two. But you must also understand and.”) that the explanation of “and” depends on the nature of the relationship between the items being counted. When they are independent, such as combining apples or cups of water, addition does apply. When they are interdependent, such as combining the two components of aerodynamic drag, pressure drag and friction drag, aerodynamicists know what to think when addition does not work. They begin by realizing that the “total drag” on an object is a non-additive combination of pressure drag and friction drag. Pressure drag can be lowered by reducing the frontal area of an object, as when bicyclists lay their upper bodies close to their bike, instead of sitting upright. Frictional drag can be reduced by making an object smoother, as when surfaces are polished. Such an example is the former use of full-length, polyurethane swim suits in Olympic swimming events.
Beginning in 1905, golfers have benefited from the design of golf balls with reduced total drag. With dimples, they travel farther. How they do it requires the two components of drag to be viewed as interdependent, as a system, for dimples do not result in a smooth surface. Instead, they are known to increase frictional drag. But, the increase in frictional drag is accompanied by a far greater decrease in pressure drag, leading to a net savings in drag. Had they been managed without a sense of a system (as when all departments in an organization focus on ways to lower their own costs – minimal deburring of machined holes, thinner paper for planning documents, and no perforations on stickers – to achieve total savings), one design team would focus on decreasing frictional drag, another on decreasing pressure drag, as if they were separate. As a result, golf balls would be smooth and polished and total drag would not be reduced. Instead, the designers use a “loss leader” strategy, deliberately making one drag component worse to lower the total drag. By increasing frictional drag, the golf balls travel farther.
Supermarkets do the same when they sell some products at a loss, looking to increase total profit when customers buy other products that are sold at a higher profit. Or, during holiday season, providing “free” turkeys for purchases over $75. By decreasing profit in one department, they can increase profit overall. What these situations have in common are examples of The Economics of Teamwork and what to think when addition does not work. They represent the limitless opportunities within organizations to purposefully manage resources, with a focus on exploiting interdependency, not unknowingly falling victim to it.